Marketplace Lending News Roundup – February 16, 2019

American Banker looks at some of the numbers in the recent CB Insights report. SoFi held talks to acquire a fintech backing some of the hottest robo …

News

During the week I share the latest marketplace lending and fintech news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here.

Goldman Sachs, Point72 and others invest $44 million in business credit startup Nav from Reuters – We start the week off with yet another big funding round. This time small business credit marketplace Nav has closed a $44m round from the likes of Goldman Sachs and Point72.

Amazon’s lending perpetuates the tech giant’s control over small businesses from Tearsheet – Amazon remains tightlipped about their small business lending operation but as Tearsheet reports these loans come with some potentially onerous restrictions.

Why has the FCA Refused the Application of Mintos and has the Decision any Consequences? from P2P-Banking – Interesting piece from P2P-Banking today on the move by Latvian lending marketplace Mintos into the UK and their rejection by the FCA.

Why venture capitalists love fintechs from American Banker – With so many funding rounds announced already this year it is clear that venture capitalists are still enamored with fintech. American Banker looks at some of the numbers in the recent CB Insights report.

SoFi held talks to acquire a fintech backing some of the hottest robo advisors as it eyes expansion beyond its lending roots from Business Insider – Interesting story about SoFi in Business Insider. They tried to acquire Apex Clearing, a digital wealth custodian, but could not agree to terms so instead they made a minority investment.

UK fintech unicorn Revolut forced to deny links to Russia from Business Insider – It seems that Revolut is in the news every day right now, this time it is accusations of political meddling in Lithuania, the country where they obtained their European banking license.

Dear Congress: Time to clarify ‘true lenders’ from American Banker – Interesting op-ed in American Banker on the “true lender” issue. I completely agree that Congress needs to act on this issue so that banking is not hobbled by a 20th century mindset.

A record 7 million Americans are 3 months behind on their car payments, a red flag for the economy from The Washington Post – There is a record number of auto loan delinquencies today. Is this the canary in the coal mine signaling the next recession? Maybe. Interesting that loans issued by the car companies are performing the worst.

Consumer lender Insikt rebrands as Aura from American Banker – Non-prime consumer lender Insikt is rebranding to Aura. They explained the origins of the new name this way: comparing a person’s aura to a credit score, saying, “It seems invisible, but it matters a lot.”

Starling Bank, now with 460K consumer accounts, raises £75M more for European expansion from TechCrunch – The strong fundraising start to the year for fintech continues with UK digital bank Starling Bank closing a £75m funding round.

Square’s banking bid avoids backlash that doomed Walmart’s from American Banker – While hurdles remain Square’s ILC application is receiving broad support and industry observers are optimistic it will be approved.

Citi rolls out new personal loan, online savings account from American Banker – Now, this is interesting. Citi is rolling out a new loan product they are calling Citi Flex Loan where credit card customers can convert part of a revolving credit line into a loan with a fixed APR.

German Lending Marketplace auxmoney Overtakes Midsize Banks in Consumer Loan Origination from Crowdfund Insider – The leading German online lending platform auxmoney issued €551 million of new personal loans in 2018, outperforming many medium sized German banks.

CommonBond gets $750 million in lending funds from top banks from American Banker – Big news from CommonBond this week as they announced an additional $750m in lending capacity from some of the biggest names in banking.

Zopa names new P2P chief and chairman from P2P Finance News – It is the end of an era in the UK. Giles Andrews, one of the co-founders of the world’s first p2p lending platform Zopa is stepping down as Chairman with Gordon McCallum being appointed to replace Giles.

From the Lend Academy Forum

The Lend Academy forum is where investors go to discuss p2p lending. Below are some topics that were being discussed this week.

Faster payment processing coming soon. – LendingClub’s announcement of faster payment processing means some changes to the secondary market.

Notes Disappeared – One LendingClub investor is reporting a handful of missing notes according to their account statement.

Cumulative ROI by Vintage Beginning 14Q1 – One Year Update – A forum member shares the latest tables on cumulative ROI by vintage.

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dv01 Raises Another $15M to Change How the Lending Industry Views Data

The technology providers that offered data analytics were way behind, and there was a huge gap in … What market does dv01 target and how big is it?

Investors are bombarded with big sets of data, and it’s a difficult and tedious process to dissect large data sets and transform it into actionable information. dv01 solves this challenge for the consumer lending industry through its end-to-end data management, reporting, and analytics solution built specifically for the needs of the mortgage and consumer lending capital markets. Clients receive real-time updates with the most recent available loan-level data throughout the course of the deal and external parties involved in the deal including originators, investment banks, and lawyers can access centrally access the data as well.

AlleyWatch sat down with founder Perry Rahbar to learn more about dv01’s trajectory, recent funding round, which brings its total funding amount to $28.3M, and to talk about the best pizza in New York.

Who were your investors and how much did you raise?

We raised $15M in Series B funding.

The series was led by Pivot Investment Partners. Other participants include a new strategic investor, Regions Financial Corp., as well as existing investors, including Quantum Strategic Partners Ltd., Jefferies Financial Group Inc., Illuminate Financial Management, and OCA Ventures.

Tell us about the product or service that dv01 offers.

dv01 is the world’s first end-to-end data management, reporting and analytics platform offering loan level transparency and insight into lending markets. dv01’s mission is to modernize the mortgage and consumer lending markets through technology and delivering all stakeholders an incredible user experience that values transparency, efficiency, and intelligence.

What inspired you to start dv01?

Working in mortgage-backed securities trading for Bear Stearns and J.P. Morgan, I had a front-row seat to the inefficient workflow and fragmented data in mortgage and consumer lending capital markets and how it contributed to the ’08 global financial crisis. The technology providers that offered data analytics were way behind, and there was a huge gap in the market to serve a $20T+ industry.

Working in mortgage-backed securities trading for Bear Stearns and J.P. Morgan, I had a front-row seat to the inefficient workflow and fragmented data in mortgage and consumer lending capital markets and how it contributed to the ’08 global financial crisis. The technology providers that offered data analytics were way behind, and there was a huge gap in the market to serve a $20T+ industry.

Why does there need to be a separate market intelligence platform focused on lending that cannot be addressed with other more broad offerings?

Current underserved market participants spend hundreds of millions of dollars on a uniquely fragmented, inefficient, and mediocre workflow. The current securitization process and infrastructure has not changed in over 20 years, especially when it comes to reporting and analytics. This systemically fragmented data workflow was a major cause of the ’08 financial crisis, and we want to prevent a repeat rendition. dv01’s focus on consumer and mortgage lending data allows us to provide granular and actionable insights for specialized investors that constitute a major part of the American economy. These investors have specific issues and needs that are unique from other investment fields.

Large datasets can be burdensome for investors to handle, both from a data cleansing, normalization, and a reporting standpoint. Answering complex questions around loan performance, prepays and defaults, and comparing across originators or loan characteristics, can be extremely difficult. dv01 makes big data simple for investors in a super user-friendly web application that can be accessible to anyone in the organization. A process that used to take days now takes seconds.

How is dv01 different?

Amongst our competitors, services offered include structuring tools, collateral reporting, managed databases, 3rd party integrations, advanced cashflow analytics, and alternative data. While our competitors each offer one of these functions, dv01 is the only markets data platform to offer all of them, and the only one to offer market surveillance at all.

Uniquely, dv01 has also created the role of loan data agent (LDA) in securitization deals. dv01’s reporting and analytics portal provides investors with the most recent available loan-level data throughout the length of the deal.

This data is accessible through dv01’s web app, and all parties involved in the deal including investors, originators, investment banks, or lawyers can access the data – free of charge. dv01 is paid directly out of the waterfall for its role as LDA. The same level of transparency that is available for market surveillance is available for all LDA deals as long as you have participated in the deal.

What market does dv01 target and how big is it?

dv01 is focused on data analytics for mortgage and consumer lending capital markets, which amount to $20T+.

What’s your business model?

In summary, dv01 is a service provider and receives overall revenue from its core suite of offerings, through a combination of bps on collateral balance paid out of deal waterfall, bps on portfolio size and annual contracts.

What was the funding process like?

Funding was very much seamless due to our round leader, Pivot, being very familiar with the business. Their style is to put small investments into young companies and then invest larger funds when they are on the verge of a breakout, and that’s exactly what happened to dv01. They’ve been with us for roughly 3 years and were ready to put full faith in our business. Other participants were also very familiar with the business, and the one new strategic partner was, in fact, a highly satisfied client. All in all, this was a pretty smooth process and I’m really grateful for it because I know it’s rare.

What are the biggest challenges that you faced while raising capital?

Since we were working with an existing investor that was familiar with the business, we didn’t encounter the usual challenges of explaining all facets of your business from the beginning.

Instead, with Pivot, the biggest thing we had to all think about was what our exposure to a recession looks like, how much would it impact our business and what stress testing our model looks like. That’s definitely a conversation that people weren’t having the last few years.

Instead, with Pivot, the biggest thing we had to all think about was what our exposure to a recession looks like, how much would it impact our business and what stress testing our model looks like. That’s definitely a conversation that people weren’t having the last few years.

What factors about your business led your investors to write the check?

dv01 is solving for core and systemic issues in a huge market with capabilities that surpass competitors. In their own words:

“dv01’s distinctive platform provides much-needed analytic insights and transparency to consumer loan assets. We have been tracking the company closely for the past couple of years and are proud to be leading this growth capital round alongside a distinguished group of investors. We see substantial opportunity for dv01 to continue to innovate for the benefit of all participants in the lending markets.” Dinkar Jetley, Pivot Investment Partners

“We are excited about furthering our relationship with dv01 through this investment. The platform has transformed our ability to analyze segments of our consumer unsecured loan portfolio and we see significant growth opportunities as they expand within the regional banking space.” Jamie Gregory, Head of Corporate Financial Strategy, Regions Financial Corp.

What are the milestones you plan to achieve in the next six months?

For the next few months, dv01 is working to roll out a new CRT Suite, Fannie Mae and Freddie Mac surveillance, a data pipeline upgrade, new portfolio management tools, and third-party data integration.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

Be very disciplined and make sure your business model is sound. As we head into tougher markets, with the potential of a recession, funding won’t be as available as it was the last five years. A great business will continue to get funded, but a lot of others won’t.

Where do you see the company going now over the near term?

We continue to focus on expanding into newer assets classes, like mortgages and eventually autos, as well as building out new workflow and data offerings. Additionally, hiring will be a huge focus for us as we continue to build out our team. We’re currently at 60 employees and have ambitious goals for this year.

What’s your favorite restaurant in the city?

Sauce Pizzeria, but I’m a bit biased because I own it with my best friend. He convinced me to start a hospitality group with him and we have four restaurants now.

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Why ordering Uber Eats could stop you securing a home loan: Nervous bankers are snooping …

‘It’s not so much that Uber Eats specifically is going to be a red flag but if you combine a lot of outgoing spending with stuff like gambling, all of them …

Why ordering Uber Eats could stop you securing a home loan: Nervous bankers are snooping through first-time buyers’ expenses after taking a beating in royal commission report

  • Excessive Uber Eats orders could make it harder for someone to get a home loan
  • Banking royal commission findings are also making banks more reluctant to lend
  • Finder.com.au said excessive spending on Uber Eats could hurt loan chances

ByStephen Johnson For Daily Mail Australia

Published: 19:02 EST, 14 February 2019 | Updated: 20:10 EST, 14 February 2019

Ordering too many Uber Eats for dinner could stop someone from securing a home loan, financial experts say.

Mortgage lenders are under pressure from tighter credit rules while the banking royal commission’s criticism of financial institutions is making them more reluctant to approve loans.

Financial products comparison website finder.com.au said excessive spending on Uber Eats could potentially make it harder for a first-time home buyer to secure a mortgage.

Ordering too many Uber Eats for dinner could stop someone from securing a home loan (stock image)

Ordering too many Uber Eats for dinner could stop someone from securing a home loan (stock image)

Ordering too many Uber Eats for dinner could stop someone from securing a home loan (stock image)

‘We do definitely expect banks to be paying more attention to the detail of people’s everyday spending,’ Finder’s insights manager Graham Cooke told Daily Mail Australia on Friday.

‘It’s not so much that Uber Eats specifically is going to be a red flag but if you combine a lot of outgoing spending with stuff like gambling, all of them collectively, potentially, make banks slightly more cautious.

‘If you do have a habit of spending excessively, that could potentially affect your chances of getting a home loan.’

An Australian Prudential Regulation Authority crackdown on investor and interest-only loans has sparked a downturn in the Sydney and Melbourne housing markets in particular.

Sydney’s median house prices has plunged by 13.7 per cent since peaking in July 2017.

Adding to that is the banking royal commissions findings, released in early February.

Lenders are under pressure from tighter credit rules while the banking royal commission is making banks take their time in approving loans (Sydney house auction pictured)

Lenders are under pressure from tighter credit rules while the banking royal commission is making banks take their time in approving loans (Sydney house auction pictured)

Lenders are under pressure from tighter credit rules while the banking royal commission is making banks take their time in approving loans (Sydney house auction pictured)

While former High Court judge Kenneth Hayne was particularly scathing of the National Australia Bank charging fees for no service, the scrutiny on the banking sector is expected to make lenders take their time when it comes to approving home loans.

‘That’s had an effect definitely on banks increasing the number of checks they’ll go through before they issue a loan,’ Mr Cooke said.

‘We expect it to take longer to get a loan. It’s probably more difficult to get a loan than it has been previously.’

While home loans were approved in just a fortnight back in 2017, lenders are now taking their time, pushing wait times for approval out to two months.

The federal government is also considering allowing banks to more easily access information on an individual’s spending habits, after a Treasury report explored giving banks a greater ability to judge a potential borrower’s credit risk.

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This start-up is bringing fast home equity loans to your smartphone bank app

… as clients, including giants like Wells Fargo, was founded in 2012 and is backed by investors including Andreessen Horowitz and Greylock Partners.

Thanks to rising home values, Americans are sitting on a record $6 trillion that can be tapped through home equity loans or cash-out refinances, according to data provider Black Knight. Banks may focus on that segment while the purchase mortgage market slows because of rising interest rates and diminished affordability.

Blend is the latest example of a tech start-up that works with banks, rather than competing against them, to bring easier-to-use digital services to the financial industry. The traditional mortgage industry is also competing with online offerings like Quicken Loans’ Rocket Mortgage, which has helped that lender gain market share.

The home equity loan or line of credit application takes about 20 minutes via a bank’s mobile phone app or website, according to Blend, and documents that need to be signed are sent digitally. The company gets a fee for every loan that is successfully closed through its software.

Blend, which has 130 banks and credit unions as clients, including giants like Wells Fargo, was founded in 2012 and is backed by investors including Andreessen Horowitz and Greylock Partners. It was valued at about $500 million in 2017, according to the Wall Street Journal.

Lynn Heitman, an executive vice president at U.S. Bank, said they partnered with Blend to “simplify and streamline the banking experience for our customers to help them achieve their goals,” from home renovations to debt consolidation, she said.

The industry isn’t done fixing the loan process, according to Ghamsari. The goal for Blend is to simplify the application into a “one-tap” approval process, reminiscent of the “one-click” purchasing tool that Amazon pioneered in the world of e-commerce.

“The process of being approved for these loans and lines will be one-tap within the next five years,” he said. “And the ability to check out will be as simple as, here’s your remaining items we couldn’t do automatically. Those things will be embedded in a one-stop shop for the consumer. Those things are coming.”

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INSIKT Changes Name to Aura

SAN FRANCISCO–(BUSINESS WIRE)–Feb 12, 2019–INSIKT, a mission-driven financial technology company that offers affordable loans to …

SAN FRANCISCO–(BUSINESS WIRE)–Feb 12, 2019–INSIKT, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced that it has changed its name to Aura to expand its focus on creating greater financial health, independence and economic stability for millions in America.

“Today, I am excited to share that INSIKT has undergone an extraordinary transformation that starts with a bold new name,” said James Gutierrez, CEO and Founder of Aura. “Aura, like your credit score, may seem invisible, but it matters a lot. Today, we commit to making the seemingly invisible role of credit, approachable, visible, clear, transparent, easy to understand and fair for all. Most financial institutions see borrowers as a number, a risk, a reflection of the past. This says nothing about a borrowers’ potential and where they can go. The difference for us — we see their Aura, not just their credit score. We see them, their potential, and their dreams.”

Since its launch in 2014, INSIKT has provided more than $390 million in affordable, credit-building loans to 320,000 borrowers at over 1,200 partner locations using technology that enables local businesses to administer credit applications.

Now, Aura will build on this success by adding a new consumer product experience that will further empower borrowers and put them on the road to financial security. Recognizing that most of its customers do not know what their credit score is or how much they should save on each paycheck, Aura will provide its borrowers with free credit scores, a summary of what’s in their credit report, and a personalized budget, including expenses, DTI and tips for savings.

Additionally, Aura is launching a new customer loyalty program, known as “Aura Hearts” that offers benefits to borrowers who pay on time such as larger future loans, lower rates, and faster pre-approvals.

“We have worked to ensure Aura makes managing debt a launch-point for personal independence,” said Gutierrez. “We want everyone to see and understand their financial history, reduce fear around personal finance in the communities we serve, and increase borrowers’ ability to navigate the financial system. Aura is here to make sure that borrowers have a true partner on their financial journey.”

Aura’s new website is located at www.myaura.com.

About Aura:

Aura is a technology-powered, Community Development Financial Institution (CDFI) that provides small, affordable loans to working families in America. Aura’s mission is to build financially healthy low-income communities by providing empowering financial services to America’s 66-million underbanked and unbanked. Aura has pioneered a cloud-based lending technology that enables trusted local businesses to submit credit applications for centralized review and approval by its proprietary scoring algorithms.

Currently available in nearly 1,200 locations across California, Texas, Illinois and Arizona, Aura has provided hundreds of thousands of credit-building, responsible loans to low-income households since launching in 2014. Aura was founded in 2012 by James Gutierrez, Kevin Kang, and Randy Wong. All three founders helped create and scale Oportun, a CDFI and one of Time Magazine’s Top 50 Most Genius Companies in 2018.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190212005204/en/

Scott Gerber | 408.202.4255 |scott@vrge.us

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: OTHER CONSUMER TECHNOLOGY DATA MANAGEMENT INTERNET SOFTWARE PROFESSIONAL SERVICES BANKING FINANCE CONSUMER

SOURCE: Aura

Copyright Business Wire 2019.

PUB: 02/12/2019 06:00 AM/DISC: 02/12/2019 06:01 AM

http://www.businesswire.com/news/home/20190212005204/en

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